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New CEOs, New Governance...

 


Executive Excellence | September 27, 2018


The Executive Excellence article, “New CEOs, New Governance...," interviewed Russell Reynolds Associates Consultant Ramón Gómez de Olea on the skill set that CEOs need to navigate the changing business world. A translated excerpt of the article is below.

Complete and resilient leaders are being sought who have the ability to face changes imposed by the current disruptive environment. But these profiles are not easily defined, as confirmed to Executive Excellence by Ramón Gómez de Olea, Country Manager of Russell Reynolds in Spain, which is a company specializing in strategic consulting to senior executives regarding talent management, evaluation and executive recruitment and services related to Corporate Governance.

Gómez de Olea is one of these people who, as said by the philosopher Elbert Hubbard, has “the talent to recognize talented people.” The managing company conducts more than 4,000 searches per year along with several consulting projects that, aside from selecting high-level executives, planning for CEO successions and searching for and evaluating Boards of Directors, allows them to learn critical market patterns.

An Industrial Engineer from the ICIA (Comillas Pontificate University), Gomez de Olea also has an MBA from the Wharton School at the University of Pennsylvania and an MA from the Lauder Institute of International Studies, which is part of the School of Arts and Sciences from the same university. Before joining Russell Reynolds, he worked at the Boston Consulting Group and in Elecnor, S.A.

Federico Fernandez de Santos: According to Karen Sibley, Dean of Brown University, new CEOs need technical training but also a background in humanities. You have a Master of Arts from the Lauder Institute of International Studies and the School of Arts and Sciences. Regarding executive searches, up to what point is it important for leaders today to have a dual vision and a profile that also values arts and humanities?

RAMÓN GÓMEZ DE OLEA: In reality, we believe that affluence and diversity in education and experience are very important. For me it’s fundamental. I think that the linear profile of a person who has only developed the technical, economic, or functional part of their brain without paying attention to any other areas is inadequate. The richest people from an intellectual standpoint have a far broader understanding of a business environment, and this is very useful when designing strategies for a company.

I’ve worked with numbers all my life because I am an Industrial Engineer by trade. When I went to study my MBA at Wharton, I thought it was going to be more of the same, meaning more technical but from another perspective. However, the MA at the Lauder Institute opened a new world for me in a number of different disciplines that I loved and had never thought about studying, such as international economic policy, political science, Geostrategy, European and multilateral institutions, economic history, and even others like symphony interpretation and philosophy. We conduct different analyses on political systems in different countries, which has been very useful when understanding why some systems perform better than others. It was a tremendously enriching experience.

Nowadays, much is said about a director profile we refer to as an Ecosystem CEO. CEOs no longer just manage resources or assets, but they must also interact with banks, investors, stakeholders… we could say that a partnership is forged in many areas where the director is not the main player, but merely a contributor to the efficient management of these connections.

This new management methodology implies having your head organized in a specific way, and in order to detect that ability in the people we evaluate at Russell Reynolds, we’ve developed, along with Hogan Assessments, an innovative evaluation methodology that allows us to predict success in senior executives.

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F. F. S.: Generally speaking, leaders think linearly, but in an environment as disruptive as this one, what type of CEOs are you looking for to successfully handle a changing situation?

R.G.O.: Today, it is more important than ever to evaluate the disruptive component of strategic skills, which includes our methodology. There are many leaders able to look to the future, model it and understand the scenarios, but the profiles that successfully materialize during change are difficult to find. Sometimes we find that disruptive component in people who aren’t CEOs, but it’s necessary to merge these two characteristics into the same person or ensure that the CEO can channel innovation.

We are moving toward an ecosystem where directors are capable of managing their surroundings. And this has nothing to do with what I or my company thinks or does, but what several players think and do. That is why it’s necessary to design long-term strategies that contemplate different factors, such as including partners or the creation of an innovation system that allows for disruptive ideas to come from workers within the organization who are not on the management team. In other words, a much humbler management model. Now, the powerful CEO has to relax his or her position to allow for strategies to be developed and that its management committee is adaptive to these new circumstances and focused on helping and cooperating.

Many times we analyze management committees where the strategy is outlined by the CEO and there isn’t any real interaction. Those who are capable of assimilating internal ideas and outside relationships with other players and get them to work together will become successful.

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F.F.S.: One of the issues in Spain that is still forthcoming is Good Governance. In a couple years, at least 30% of public company advisors should be women; but we are still a country where few women are on Boards, and the average age on these governing bodies is elevated, and where sometimes the old boys club persists. Russell Reynolds is one of the major governance advisors for large companies in Spain. What is your vision on this issue and how do you help this necessary modernization to Good Corporate Governance?

R.G.O.: Despite everything, I think Spain has progressed greatly in several aspects. You need to take into consideration that this change of governance originated in the United States with the Enron scandal. From then on, the American regulator began to realize that there was a breakdown. Furthermore, we have the example of the British, who have traditionally maintained a very pioneering vision of governance. Continental Europe has been addressing this issue by taking a more Cartesian approach, such as in our legal system, but with several similarities.

Spain has experienced great progress both in the drafting of Codes and in compliance by companies. The current situation can be summarized in three company segments. The first segment widely meets on its own conviction and even innovates Corporate Governance. There is as second segment that meets the recommendations but, in many cases, there is not a real change to their governance. In the middle of these two segments are many companies who respectfully observe the need to improve their governance and meet or explain recommendations. On the other hand, it does seem that an organized search of independent advisors and the role of Board commissions have been consolidated.

The entire article in its original Spanish can be found here.

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